Hong Kong Virtual Asset Exchange has added 4 new members, giving you a quick overview of each company’s background and latest regulatory routes

Author: Nancy, PANews

Hong Kong’s licensed virtual asset trading platform (VATP) has welcomed four new members, following OSL Exchange, HashKeyExchange and HKVAX. On December 18, the Hong Kong Securities and Futures Commission issued a document announcing that it would issue licenses to four virtual asset trading platforms under the rapid licensing process, including Cloud Account Greater Bay Area Technology (Hong Kong), DFX Labs, Hong Kong Digital Asset Trading Group and Thousand Whales Technology.

At the same time, the Hong Kong Securities and Futures Commission is accelerating the approval process of virtual asset licenses and formulating a clear roadmap for the licensing process to further expand Hong Kong’s territory in the Web3 field.

**Four platforms obtained licenses from the Securities and Futures

Commission of Hong Kong**

This time, the Hong Kong Securities Regulatory Commission approved four platforms at one time, bringing the number of licensed virtual asset trading platforms in Hong Kong to seven.

**HKbitEX: Launched by the former Hong Kong Stock Exchange official, it

has received tens of millions of dollars in financing**

HKbitEX was launched by Hong Kong Digital Asset Trading Group Co., Ltd. and was established in 2019. It is a company dedicated to providing compliant and regulated digital asset spot trading and over-the-counter (OTC) trading platforms for global professional investors.

It is reported that the parent company behind Hong Kong Digital Asset Trading Group is Taiji Capital Group, which mainly provides tokenized asset services, including three major sectors: capital market and wealth management, digital asset exchange, and Web3 SaaS and technology research and development. In September 2023, Taiji Capital also announced the launch of Hong Kong's first real estate fund security token issuance (ST0). The closed-end fund of its subsidiary Pioneer Asset Management issued the token PRINCE, with the goal of raising approximately HK$100 million at the time. Gao Han, the founder of Tai Chi Capital, once worked for the Hong Kong Stock Exchange and was mainly responsible for promoting Hong Kong Stock Exchange's products in the mainland, including Hong Kong Stock Connect and Bond Connect. Tai Chi Capital has also attracted many Hong Kong Stock Exchange executives to join.

As one of the first institutions to apply for a virtual asset trading platform license from the Hong Kong Securities Regulatory Commission, HKbitEX has received multiple rounds of financing, including in December 2020, HKbitEX announced the completion of a $10 million A2 round of financing. This round of financing was provided by Hong Kong listed company Anling International SubsidiaryAxion Global Investment Limited and Hanwha Asset led the investment, and other participating investors include Deding Innovation Fund, Jianfeng Capital Management, Legend Venture Capital and Lingjie Capital; in November 2021, HKbitEX once again announced the completion of US$9 million Pre-B for US$300 million round of financing.

Accumulus: Backed by China’s top 500 companies

The virtual asset trading platform Accumulus was launched by Cloud Account Greater Bay Area Technology (Hong Kong) Co., Ltd. It will be launched in Hong Kong in April 2023 and officially submitted a license application for a virtual asset trading platform to the Hong Kong Securities Regulatory Commission at the end of the same year.

Cloud Account Hong Kong is registered by Cloud Account and is the only overseas business headquarters. The group has obtained an overseas direct investment quota of RMB 985 million approved by the National Development and Reform Commission and others in the mainland, supporting Cloud Account Hong Kong to focus on Web 3.0 to expand its business. According to the official introduction, Cloud Account is China’s largest online human resources service company, serving a total of 110 million new employment form workers (freelance workers) from 138 countries and regions. This year, it was selected with a revenue of 108.4 billion yuan. Among the "Top 500 Chinese Enterprises in 2024".

DFX Labs **: The team has many years of experience in the blockchain

industry**

DFX Labs (DFX Labs Company Limited) was the last applicant for a virtual asset trading platform in Hong Kong last year. DFX Labs’ team has extensive experience in the blockchain and financial technology fields, such as COO Simon Au Yeung, former CEO of Blockchain Finance and virtual asset trading platform BGE, and Hong Kong IEEE co-chairman and chief technology officer David H. Zeng Worked for Morgan Stanley, Dell Technologies, HashKey Group, etc.

EX.IO : Sina’s Internet brokerage is a major investor

EX.IO (previously known as xWhale) launched by Thousand Whales Technology (BVI) Limited is the first and only licensed institution with a brokerage background in Hong Kong. Huasheng Capital Group, an Internet brokerage affiliated to Sina, serves as the main investor. Longling Capital and Weixin Jinke (HKG: 2003) invested. EX.IO was originally named xWhale and was established after the original Web3 trading platform BusyWhale and Huasheng Securities reached a strategic agreement in May last year.

**Released a six-step roadmap for the licensing process and will set up

an advisory group early next year**

Although Hong Kong has shown its determination to vigorously develop Web3 and has attracted many encryption ecological projects/platforms to apply to join, licenses have been continuously withdrawn during the transition period of license applications. By June, only 11 platforms were deemed to have been issued. For license applicants, the challenges facing Hong Kong cannot be ignored.

In order to improve the efficiency of approval and ensure compliance, Hong Kong launched an inspection plan in June this year and completed relevant on-site inspections of all licensed applicants, which achieved direct results. Therefore, the Hong Kong Securities Regulatory Commission decided to implement virtual asset trading in The platform follows this approach when it hires external evaluation experts to conduct the second-stage evaluation.

"The Commission has been actively communicating with the senior management and ultimate controllers of virtual asset trading platforms. This move helps us clarify the regulatory standards that should be met and accelerate the regulatory standards for virtual asset trading platforms." Intermediary Department of the Hong Kong Securities and Futures Commission Executive Director Ye Zhiheng said.

In the latest circular, the Hong Kong Securities and Futures Commission also formulated a clear roadmap for the licensing procedures for virtual asset trading platforms:

1. Conduct on-site inspections, provide opinions, and require the platform to submit a corrective action plan.

2. After reaching a consensus on the corrective plan, a conditional license will be granted to it. The platform will continue to complete the corrective measures according to the plan, conduct penetration testing and vulnerability assessment and obtain satisfactory results, and then it can operate within the restricted business scope. operations;

3. Penetration testing and vulnerability assessment should be conducted by an independent third party, and the management of the platform should ensure that all important and critical corrective measures continue to be taken.

4. After completing corrective measures, vulnerability assessment and test license testing, the platform can be allowed to operate within the restricted business scope.

5. The platform must hire external experts to evaluate the revised policies and procedures (including revised procedures and controls). The China Securities Regulatory Commission will supervise the entire second-stage evaluation process, clarify regulatory requirements and provide opinions on the evaluation results.

6. The China Securities Regulatory Commission will revoke the licensing conditions that restrict the scope of business after the completion of the second phase of the assessment. This phase of assessment will focus on ensuring that the policies, procedures, systems and monitoring measures (policies and procedures) of the virtual asset trading platform are appropriate. The design and implementation are carried out through direct verification.

"We are trying hard to regulate this emerging market, but it will not be easy because it is an existing huge market with advanced technology, no boundaries and imperfect regulations. The Hong Kong Securities and Futures Commission will start in 2025 A formal advisory group will be established for all licensed platforms at the beginning of the year, and each licensed institution will appoint its senior personnel to serve as representatives. The Securities Regulatory Commission will be able to fully listen to and consider their views. This will enable us to brainstorm and systematically prioritize development issues based on investor protection." Ye Zhiheng previously revealed, and the Hong Kong Securities Regulatory Commission also recently disclosed that it will. In early 2025, more guidance on licensing options will be provided to new corporations applying for a second virtual asset trading platform license.